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U.S. manufacturing activity cools in February

Posted by IndustryNet on Friday, March 1, 2019

100000349_metalfabrication2After bouncing back from an end-of-year slump in January, manufacturing activity cooled in February, according the Institute for Supply Management’s latest survey of manufacturing executives.

U.S. manufacturing activity now stands at 54.2%, down 2.4% from January’s reading of 56.3%.

Says Tim Fiore, Chairman of the ISM: “Comments from the panel reflect continued expanded business strength, supported by notable demand and output, although both were softer than the prior month.”

Dragging down this month’s index was a significant drop in production. Fewer new orders, and a slowdown in hiring also impacted February’s reading.

Despite the cooler reading, February’s ISM index still reflects a growing U.S. manufacturing sector. Any reading above 50% indicates expansion.

Feburary stands as the 36th consecutive month of growth in the U.S. manufacturing sector, and the 118th straight month of growth in the economy overall.

Sixteen of eighteen industries surveyed by the ISM reported growth, led by printing & related support activities; textile mills; computer & electronic products; electrical equipment; and fabricated metal products. The only sector that reported a contraction in the month of February was non-metallic mineral products.

Production tanks

After surging 6.4% in January, industrial production dropped 5.7% in February. The ISM’s Production Index now stands at 54.8%.

“Production was not able to keep pace with customer-inventory demand and was not able to prevent a growth in backlog orders,” said Fiore. Fiore also went on to partially blame weather conditions for last month’s slower rate production.

Twelve out of eighteen industries nonetheless ramped up production in February, led by printing & related support activities; chemical products and miscellaneous manufacturing.

New orders sink

The ISM’s New Orders Index also stumbled in February, down 2.7%, but still remains expansionary, coming in 58.2%. This represents the 28th consecutive month U.S. manufacturers have reported expanded in new orders.

Thirteen out of eighteen industries reported growth in new orders, according to the ISM. New order growth was strongest in wood products, computer & electronic products, and printing/related support activities.

Employment growth softenschicken processing

The ISM’s employment index also eased back, down 3.2% in February to a reading of 52.3%. Overall, employment has been growing steadily, with the ISM recording a 30th consecutive month for employment index growth.

Adding to this, The Department of Labor reported last month that the U.S. added 304,000 jobs in January, with U.S. manufacturing accounting for 13,000 of those new jobs.

Overall, U.S. manufacturing has grown by 261,000 jobs in the past year, with growth overwhelmingly centered in the durable goods category. All eyes are now on February’s labor report, due out March 8th.

Ten of eighteen industries reported growth in employment, strongest in apparel, leather & allied products; nonmetallic mineral products; electrical equipment; and food, beverage & tobacco products.

About the ISM

The Institute for Supply Management® (ISM®) is the first and largest not-for-profit professional supply management organization worldwide. Founded in 1915, ISM has over 50,000 members located in 100 countries.

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